PFRDA calls for Fund Managers to look after Central Government Employees NPS

Pension fund regulator PFRDA has invited bids from financial institutions to manage funds of Central Government Employees under the New Pension Scheme (NPS) for the next three years beginning April 1, 2012.

The fund managers will be required to manage the pension assets of Central government employees, according to Pension Fund Regulatory and Development Authority (PFRDA).

The three pension fund managers will have to submit bids by March 15, PFRDA said. At present, pension funds of government employees are managed by three pension fund managers (PFMs) — LIC Pension Fund, SBI Pension Fund, and UTI Retirement Solutions. The total corpus of the government employees as on December 2011 was Rs 12,769 crore.

These three fund managers are also eligible for participating in the bidding process, the regulator said. The total average monthly subscriptions of government employees is around Rs 500 crore.

National Pension System (NPS) was introduced on January 1, 2004, and is mandatory for central government employees (except armed forces personnel) appointed on or after January 2004. The scheme was made available to all citizens on a voluntary basis from May 1, 2009.

Even though NPS is an immensely beneficial financial product for unorganised sector employees, especially those who do not manage a steady source of income after retirement, it has received lukewarm response till now.

To popularise the scheme, PFRDA, in September 2010, introduced the Swavalamban scheme. Under this scheme, the government contributed Rs 1,000 per year to each NPS account opened in the year 2010-11 and for the next three years, i.E., 2011-12, 2012-13 and 2013-14. To be eligible, a person has to make a minimum contribution of Rs 1,000 and maximum contribution of Rs 12,000 per annum.